Hi

Ok I have another strategy for those that don't mind high risk.

This one relies on volatility so I guess the currencies that are the most volatile are the best. Perhaps GBP/USD and EUR/USD.

It would seem sensible to have stop loss limits closer/smaller than your profit lock limits. This way you only need to win less than half the time.

* If you stop loss was 3 and your profit lock was 9. One 'win' can fund up to 3 losses. To to break even you only need to be right one third of the time.

* If your stop loss was 2 and your profit lock was 4 then you only need to be right half the time to break even.

* If your stop loss was 40 and your profit lock was 120 then you only need to be right one third of the time to break even.

Ok that makes sense. So I traded like that and got hit every time. The reason I wasn't trading with large enough stop loss limits. I found that with anything less than 30 pips stop loss the market volatility ensured that the closest limit (stop OR profit lock) to my opening position, got hit first.

So I figured why not make that work for me.

1: Look at your graphs on 1 minute or 5 minute (these show the most volatility, longer charts cover that up). Decide on the latest trend, switch to a longer timeframe and use RSI(14) (if it is above 50 it may rise and below 50 it may fall) to help decide if it will continue, if you like.

2: Place trade in direction of trend with a low profit lock limit of around 5 to 10 pips (or more if you like, but the higher this limit the greater the risk it won't trigger).

3: Place a stop loss limit of between 50 and 100 pips. The lower the limit the higher the risk it'll trigger. If it is over the days high/low then even better.

The theory is that since volatility causes small swings 'all over the place' even with larger trends being evident, it will be volatility causing the closest limits to be hit first. If the closest limit is the profit lock then volatility should cause it 'on average' to be hit more times than the larger stop loss.

If you think the trend is going to reverse and is at a pivot point, then trade in the opposite direct. It shouldn't matter which direction you place the trade so long as you are not at the days high/low or in the middle of a much larger trend (i.e. a freefall or rocket rise) then you stand a good chance of being right.

Of course you can enhance this strategy with resistance levels, fib limits and everything else as you learn more. But for newbies with reasonable capital invested and no aversion to high risk, this can be a good starting strategy allowing you to learn as you go.

So far this trade strategy has worked out 'overall' for me.

Best Wishes,

Matt

PS: I have used this system for 3 and 1/2 weeks. I place a single trade every morning around 7.30 and check again at 5pm. I always let the limits close the trade. I risked $50 of the initial investment with each trade then increased the risk to $100 as soon as I had that amount in profit.

So far it has taken a mini account at from $312 to $897. Of course as noted above I only need to be unlucky/wrong once for a weeks worth of success to be wiped out.

Ok I have another strategy for those that don't mind high risk.

This one relies on volatility so I guess the currencies that are the most volatile are the best. Perhaps GBP/USD and EUR/USD.

*Preamble:*It would seem sensible to have stop loss limits closer/smaller than your profit lock limits. This way you only need to win less than half the time.

*For example:** If you stop loss was 3 and your profit lock was 9. One 'win' can fund up to 3 losses. To to break even you only need to be right one third of the time.

* If your stop loss was 2 and your profit lock was 4 then you only need to be right half the time to break even.

* If your stop loss was 40 and your profit lock was 120 then you only need to be right one third of the time to break even.

Ok that makes sense. So I traded like that and got hit every time. The reason I wasn't trading with large enough stop loss limits. I found that with anything less than 30 pips stop loss the market volatility ensured that the closest limit (stop OR profit lock) to my opening position, got hit first.

So I figured why not make that work for me.

**Volatility Exploitation Strategy**1: Look at your graphs on 1 minute or 5 minute (these show the most volatility, longer charts cover that up). Decide on the latest trend, switch to a longer timeframe and use RSI(14) (if it is above 50 it may rise and below 50 it may fall) to help decide if it will continue, if you like.

2: Place trade in direction of trend with a low profit lock limit of around 5 to 10 pips (or more if you like, but the higher this limit the greater the risk it won't trigger).

3: Place a stop loss limit of between 50 and 100 pips. The lower the limit the higher the risk it'll trigger. If it is over the days high/low then even better.

The theory is that since volatility causes small swings 'all over the place' even with larger trends being evident, it will be volatility causing the closest limits to be hit first. If the closest limit is the profit lock then volatility should cause it 'on average' to be hit more times than the larger stop loss.

If you think the trend is going to reverse and is at a pivot point, then trade in the opposite direct. It shouldn't matter which direction you place the trade so long as you are not at the days high/low or in the middle of a much larger trend (i.e. a freefall or rocket rise) then you stand a good chance of being right.

Of course you can enhance this strategy with resistance levels, fib limits and everything else as you learn more. But for newbies with reasonable capital invested and no aversion to high risk, this can be a good starting strategy allowing you to learn as you go.

**WARNING: This is risky.**We are only using risk captial in Forex trading right? Only using money we can afford to lose. Of course we don't want to lose but we can take risk...? This approach is high to medium risk. ONE loss can wipe out many wins. Perhaps a trailing stop is a good idea. I haven't tried it I fear them triggering too soon.So far this trade strategy has worked out 'overall' for me.

Best Wishes,

Matt

PS: I have used this system for 3 and 1/2 weeks. I place a single trade every morning around 7.30 and check again at 5pm. I always let the limits close the trade. I risked $50 of the initial investment with each trade then increased the risk to $100 as soon as I had that amount in profit.

So far it has taken a mini account at from $312 to $897. Of course as noted above I only need to be unlucky/wrong once for a weeks worth of success to be wiped out.

Last edited: Oct 23, 2007